What Is Class 4 NIC? National Insurance Explained for Self-Employed Workers
If you’re self-employed in the UK, understanding your National Insurance obligations is vital for staying compliant and avoiding unexpected tax bills. One key component is Class 4 National Insurance Contributions (NICs). But what is Class 4 NIC, how is it calculated, and when do you need to pay it?
What Is Class 4 NIC?
Class 4 NIC is a type of National Insurance Contribution paid by self-employed individuals on their profits. It’s separate from Class 2 NICs (which are a flat weekly rate) and only applies once your earnings exceed a specific threshold.
While Class 2 NIC helps you qualify for the State Pension and certain benefits, Class 4 NIC is primarily a tax on profits similar in function to Income Tax, but distinct.
You do not get additional state benefits in return for Class 4 NIC payments
Who Pays Class 4 NIC?
You’ll need to pay Class 4 NIC if all of the following apply:
- You’re self-employed
- You’re registered for Self Assessment
- Your annual profits (not turnover) are above the Lower Profits Limit
Limited company directors or employees do not pay Class 4 NIC. They pay Class 1 NIC through PAYE.
Class 4 NIC Rates and Thresholds (2025/26)
For the tax year 6 April 2025 to 5 April 2026, the Class 4 NIC rates and thresholds are:
| Threshold Type | Income Range | Rate |
| Lower Profits Limit | £12,570 – £50,270 | 6% |
| Above Upper Limit | Profits over £50,270 | 2% |
So, if your profits are:
- £13,000, you’ll pay 6% on £430 (£13,000 – £12,570)
- £55,000, you’ll pay:
- 6% on £37,700 (£50,270 – £12,570)
- 2% on £4,730 (£55,000 – £50,270)
These rates are automatically calculated and collected when you file your Self Assessment return with HMRC.
